Carlos Tavares, chief executive officer of Stellantis NV, at the Stellantis auto manufacturing plant in Sochaux, France, on Thursday, Oct. 3, 2024. - Photographer: Nathan Laine/Bloomberg
PARIS: Carlos Tavares’ packed schedule of public events at the Paris auto show signals the Stellantis chief executive officer (CEO) will come out fighting after a massive profit warning in late September, even after announcing his retirement date.
The Sept 30 warning from the world’s No. 4 automaker shocked investors used to high margins fuelled by lucrative US pickup truck and Jeep sales.
Stellantis stock is now down nearly 45% year-to-date.
Tavares initially brushed off the US problems as a “small operational error”.
But Stellantis shares resumed their slide last Friday as news of his exit when his contract expires in 2026. A major management reshuffle failed to soothe investors.
Previously seen as almost invincible after revving up Peugeot maker PSA and then overseeing its merger with Fiat Chrysler to create Stellantis, Tavares is in unfamiliar territory.
The 66-year-old is scheduled to speak at five events, the same as Renault CEO Luca de Meo, but more than executives from BMW and many other automakers.
Volkswagen chief Oliver Blume will not attend the show at all.
Tavares will be under pressure to explain how he plans to revive Stellantis’ fortunes in his remaining 18 months at the helm at a time of growing competition from cheaper Chinese rivals, weak demand and rising costs.
Data from analysts and interviews with industry players show major US operational errors at Stellantis, which raised prices beyond customers’ budgets then reacted too slowly to discount models, leaving tens of thousands of cars stuck on dealer lots.
“They tried for too long to stand tough on pricing,” said Erin Keating, an analyst at researchers Cox Automotive, whose data showed inventory problems across the board at Stellantis.
“When the United States is your cash cow, it seems negligent to ignore it.”
Dealers complained that, besides over-pricing, Stellantis scrapped entry-level vehicles and under-invested in popular cars while rivals, including Ford and General Motors, revamped theirs.
Ford in particular has eaten into Jeep’s market with its Bronco sport utility vehicle.
In a Sept 10 letter to Tavares, Stellantis national dealer council president Kevin Farrish complained the pursuit of short-term profits meant “rapid degradation” of the Jeep, Dodge, Ram and Chrysler brands, adding: “You created this problem”.
David Kelleher, president of David Auto Group, which has a Chrysler-Dodge-Jeep-Ram store outside Philadelphia, said when Stellantis was created in 2021 he sold an average of 165 new cars per month. This year, that has fallen to 89.
“We need a CEO who understands the North American market,” Kelleher said.
Tavares faces tough choices and a possible battle with the United Auto Workers (UAW) union to fix Stellantis’ problems.
The UAW has threatened to strike over delayed investments, prompting lawsuits from Stellantis accusing the union of breach of contract. Experts said, long term, Stellantis must determine whether it needs four separate US brands.
In downturns going back to the early 1980s when Lee Iacocca turned Chrysler around, the company that is now Stellantis has often been the first of the Detroit Big Three to suffer, with lower-cost products and more price-sensitive customers.
Today, Stellantis’ problem is different.
Like rivals, Stellantis raised prices during the pandemic as supply chain glitches caused shortages of new cars. But it then refused to lower them.
Pat Ryan, CEO of car-shopping app CoPilot, said Stellantis raised prices 50% between 2019 and 2024, while inflation rose 23%.
“Stellantis really priced themselves out of their historical market,” Ryan said.
Data provided to Reuters by CoPilot showed 131 days supply on dealer lots of Ram 1500 pickup trucks, 41 days above its nearest rival the Chevrolet Silverado. — Reuters
